USING ECONOMIC EVALUATIONS IN DRUG REIMBURSEMENT DECISIONS ‘NICE’ experiences from overseas

1. USING ECONOMIC EVALUATIONS IN DRUG REIMBURSEMENT DECISIONS‘NICE’ experiences from overseas Michael Drummond Centre for Health Economics University of York United Kingdom

2. OUTLINE OF PRESENTATION • Some background. • International guidelines for economic evaluation. • Procedures in different countries. • Lessons from the use of economic evaluation in drug reimbursement decisions. • Issues for countries considering introducing economic evaluation requirements.

3. SOME BACKGROUND • Several jurisdictions have imposed a ‘Fourth Hurdle’ or requirement for economic data as part of pricing/reimbursement decisions for drugs. • The new requirements are usually accompanied by a set of guidelines for company submissions. • Pricing decisions may or may not be linked with reimbursement decisions. • Australia was the first jurisdiction to implement such a requirement. England and Wales (through the National Institute for Clinical Excellence) provides a recent example.

4. CLASSIFICATION OF EXISTING GUIDELINES PURPOSE SOURCE Reimbursement or Listing Methodological Standards Ethics and Conduct Australia Belgium Finland The Netherlands Norway Ontario Portugal Sweden United Kingdom Government or Payers CCOHTA (Canada) PHS Panel (USA) AMCP (USA) Academia Langley et al (USA) Alban et al (DK) LDI Task Force (USA) Rovira et al (Spain) Hannover (Germany) BESPE (Belgium) BMJ Working Party (UK) Garattini et al (Italy) College of Economists (France) LDI Task Force (USA) Industry PHrMA (USA)

5. IN GENERAL, WHAT’S COVERED BY GUIDELINES? • Viewpoint for analysis. • Choice of comparator. • Form(s) of economic analysis. • Measurement and valuation of costs and benefits. • Discounting. • Allowing for uncertainty. • Presentation of results.

6. THE MAIN SIMILARITIES AMONG GUIDELINES • Choice of comparator. • Importance of good data on clinical effectiveness. • Discounting of future costs and benefits. • Incremental comparisons. • Allowing for uncertainty.

7. MAJOR AREAS FOR METHODOLOGICAL DEBATE • Viewpoint for the analysis. • Relevance of Phase III trials and the role of modelling. • Measurement and valuation of health outcomes (e.g. QALYs, WTP). • Handling uncertainty. • Budget impact analysis.

8. PRICING AND REIMBURSEMENT OF DRUGS IN AUSTRALIA • Submissions for inclusion on the Pharmaceutical Benefits Schedule are made to the Pharmaceutical Benefits Advisory Committee (PBAC). • Submissions are required for all new drugs (including additional indications and new formulations) to be used outside of public hospitals. • The PBAC issues recommendations to the Minister. • Although a price is assumed in the submission, pricing decisions are made by a separate committee.

9. SUBMISSION AND REVIEW PROCESS UNDER THE AUSTRALIAN GUIDELINES(Glasziou and Mitchell, 1996)

10. PRICING AND REIMBURSEMENT OF DRUGS IN ENGLAND AND WALES • Most drugs are reimbursed under the NHS at the manufacturer’s chosen price. • Several drugs with a ‘major impact on the NHS’ are selected by NICE for detailed appraisal. • On the basis of its appraisal, NICE issues guidance on the use of health technologies to the NHS. • Since December 2001 the guidance has been mandatory.

11. Appraisal Process Diagrammatic Timeline DH = Department of Health NAW = National Assembly of Wales NHS = National Health Service Source : National Institute for Clinical Excellence. Guide to the technology appraisal pr ocess. 1: Introduction and background to the appraisal process . London, NICE, 2001. NATIONAL INSTITUTE FOR CLINICAL EXCELLENCE (NICE) APPRAISAL PROCESS

12. NICE TECHNOLOGY APPRAISALS ISSUED BY 2001 Cardiovascular disease Coronary artery stents in the treatment of IHD (May 2000). Implantable cardioverter defibrillators for arrhythmias (September 2000) Endocrine diseases Pioglitazone for type 2 diabetes mellitus (March 2001). Rosiglitazone for type 2 diabetes mellitus (August 2000). ENT Hearing aid technology (July 2000). Gastrointestinal disease Laparoscopic surgery for inguinal hernia (January 2001). Proton pump inhibitors for dyspepsia (July 2000).

13. NICE TECHNOLOGY APPRAISALS ISSUED BY 2001 Infections/infectious diseases Interferon alpha and ribavirin for hepatitis C (October 2000). Zanamivir for the treatment of influenza (November 2000). Malignant disease and immunosuppression Taxanes for breast cancer (June 2000 and September 2001). Fludarabine for chronic b-cell lymphocytic leukaemia (September 2001). Topotecan for advanced ovarian cancer (August 2001). Docetaxel, paclitaxel, gemcitabine and vinorelbine for non-small cell cancer (June 2001). Gemcitabine for the treatment of pancreatic cancer (May 2001). Temozolomide for malignant glioma (April 2001). Laparoscopic surgery for colorectal cancer (December 2000). Liquid based cytology for cervical screening (June 2000). Taxanes for ovarian cancer (May 2000).

14. NICE TECHNOLOGY APPRAISALS ISSUED BY 2001 Mental health/central nervous system Donepezil, rivastigmine and galantamine for Alzheimer’s disease (January 2001). Methylphenidate for attention deficit hyperactivity disorder (October 2000). Orlistat for the treatment of obesity in adults (March 2001). Riluzole for motor neurone disease (January 2001). Sibutramine for obesity in adults (October 2001). Musculo skeletal and joint COX II selective inhibitors for osteoarthritis and rheumatoid arthritis (July 2001). Hip prostheses for primary hip replacement (April 2000). Autologous cartilage transplantation for full thickness cartilage defects in knee joints (December 2000).

15. NICE TECHNOLOGY APPRAISALS ISSUED BY 2001 Oral and maxillofacial Wisdom teeth – appropriate removal (March 2000). Respiratory systems Inhaler systems for under-5s (August 2000). Skin/wounds Debriding agents and specialist wound care clinics for difficult to heal surgical wounds (April 2001).

16. MOST RECENT GUIDANCE FROM NICE • New topics are not dissimilar from those studied this far: • glycoprotein 11b/111a inhibitors revision; • surgery to aid weight reduction; • pegylated liposomal doxorubicin hydrochloride for advanced ovarian cancer; • metal hip resurfacing arthoplasty; • human growth hormone in children with growth failure; • routine antenatal anti-D prophylaxis for RhD-negative women; • infliximab for Crolin’s disease. • Now that NICE also issues clinical practice guidelines there is a growing debate about the relationship between technology appraisals and practice guidelines.

17. MAIN LESSONS FROM THE USE OF ECONOMIC EVALUATION AT THE CENTRAL LEVEL (1) • Demonstration of clinically-important benefits is still paramount. • Economic data are more important when there is substantial budgetary impact. • Devices and procedures are generally harder to appraise than drugs.

18. MAIN LESSONS FROM THE USE OF ECONOMIC EVALUATION AT THE CENTRAL LEVEL (2) • Difficulties arise owing to the lack of transferability of economic data. • Political will is sometimes tested (e.g. Beta-interferon). • In reimbursement decisions, total refusal is rare; limitations or restrictions in use are much more common.

19. NICE GUIDANCE ON THE USE OF COX II SELECTIVE INHIBITORS (CELCOXIB, ROFECOXIB, MELOXICAM AND ETODOLAC) FOR OSTEOARTHRITIS AND RHEUMATOID ARTHRITIS Cox II selective inhibitors are not recommended for routine use in patients with rheumatoid arthritis (RA) or osteoarthritis (OA). They should be used in preference to standard NSAIDs, when clearly indicated as part of the management of RA or OA, only in patients who may be at ‘high risk’ of developing serious gastrointestinal adverse effects.

20. MAIN LESSONS FROM THE USE OF ECONOMIC EVALUATION AT THE CENTRAL LEVEL (3) • Cost-effectiveness of a technology may change over time and decisions may have to be reviewed. • Application of economic evaluation in decision making has revealed weaknesses in Phase III drug studies. • Litigation is increasingly being used by manufacturers. • Decisions do reflect a ‘cost-effectiveness logic’ although other factors clearly come into play.

21. INCREMENTAL COST PER ADDITIONAL LIFE-YEAR GAINED LEAGUE TABLE Source: George et al. PharmacoEconomics 2001; 19(11): 1103-1109.

22. PROBLEMS WITH A SINGLE COST-EFFECTIVENESS THRESHOLD • Cost-effectiveness of health technologies varies by country. • Societal willingness-to-pay for health technologies may vary by country. • Without the overall budgetary impact, the cost-effectiveness ratio cannot tell us the opportunity cost of adopting the new technology. • Other factors (e.g. equity) enter into decision-making.

23. FACTORS FREQUENTLY CONSIDERED ALONGSIDE COST-EFFECTIVENESS • Seriousness of the health condition. • Availability of alternative therapies. • Number of patients, and hence budgetary impact. • Daily cost to patients if drug not listed. • Whether the drug is a ‘lifestyle drug’.

24. HOW ARE REIMBURSEMENT RULES OR GUIDANCE IMPLEMENTED? • Depends on the jurisdiction and clinical setting. • Use of hospital-based drugs can be influenced by budgetary controls and formulary listing. • Use of drugs in primary care can be influenced by clinical guidelines (e.g. approval ‘on authority’), financial incentives and formulary restrictions. • In the UK, the Department of Health is conducting a study of the implementation of NICE guidance.

25. ISSUES FOR COUNTRIES INTRODUCING THE ‘FOURTH HURDLE’ • Do we request evidence for all new drugs, or just some? • How do we prioritize drugs for assessment? • Does it make sense to assess several drugs in the same class together? • How prescriptive, or flexible, should we be in specifying the data requirements?

26. ISSUES FOR COUNTRIES INTRODUCING THE ‘FOURTH HURDLE’ (Continued) • Should we be willing to accept data from other countries? If so, which? • Should we be willing to accept commercial-in-confidence data submitted by companies? • Should the reasons for reimbursement decisions be made public? • Should there be an appeals process? If so, what should this consist of?

27. ISSUES FOR COUNTRIES INTRODUCING THE ‘FOURTH HURDLE’ (Continued) • Should we consider a two-stage appraisal process? • Should we consider risk-sharing deals with companies?

28. ACCEPTING DATA FROM OTHER COUNTRIES • An important issue for countries with limited resources to undertake or assess economic evaluations. • The key issue is whether economic studies are generalizable from one setting to another.

29. FACTORS LIKELY TO LIMIT GENERALIZABILITY OF ECONOMIC STUDIES • Demography and epidemiology of disease. • Clinical practice patterns. • Relative price differences. • Incentives to health professionals or institutions. • Community valuations of health and health care.

30. THE GENERALIZABILITY OF ECONOMIC EVALUATIONS OF DRUGS IN EUROPE • What are the main causes of variation in study results from place to place? • Does the extent of variation differ among different health economic study types? (e.g. modelling studies, trial-based studies). • Are there systematic differences in study results between particular countries? • Is the extent of variation in study results between countries important for decision-making? Barbieri et al, 2003.

31. QUANTITY OF STUDIES AND RANGE OF COVERAGE • 2400 references retrieved. • 46 intercountry comparisons: • 29 comparisons in multicountry studies; • 17 comparisons in methodologically-equivalent single-country studies.

32. MAJOR CAUSES OF VARIATION IN STUDY RESULTS FROM PLACE TO PLACE • Depends on type of study. • When only unit costs are allowed to vary, drug costs and hospitalization costs are the most important causes. • When all factors are allowed to vary, differences in resource use and cost are the most important causes.

33. 30 27 25 20 17 17 15 15 G or PG 15 LG or NG 11 11 10 10 10 9 8 8 7 6 5 2 2 0 0 0 TB/V TB/NV M/V M/NV TB M RV RN T GENERALIZABILITY OF STUDIES BY METHODOLOGY

34. RELATIVE COMPARISON OF COST-EFFECTIVENESS AMONG COUNTRIES

35. IMPORTANCE OF VARIATION IN STUDY RESULTS FOR DECISION-MAKING • Depends on the threshold cost-effectiveness ratio. • With a willingness-to-pay for a QALY of $50,000 we would only reach a different decision (comparing countries) in 3 out of 28 cases.

36. CONCLUSIONS • Several jurisdictions now request cost-effectiveness data in respect of drug pricing or reimbursement decisions. • These decision-making processes have proved workable, although many problems/ issues have emerged. • Other countries introducing the ‘Fourth Hurdle’ can learn from others’ experiences.